March 8, 2013

In Yet Another Round Of Layoffs, Google Cuts 1,200 Motorola Workers

Google has once again lowered the hatchet upon their newly acquired Motorola Mobility business. Last August, Google cut 20 percent of Motorola´s workforce. A third of their offices worldwide were closed in this round of job cuts.

Today, the Wall Street Journal reported Google is now cutting ten percent of Motorola Mobility´s hardware workforce, or about 1,200 employees. Google purchased Motorola Mobility last May for $12.5 billion to boost their patent portfolio and presumably to begin new smartphones and television boxes.

In a letter to employees obtained by the Journal, Motorola Mobility claims the layoffs are an attempt to return to profitability.

“While we're very optimistic about the new products in our pipeline, we still face challenges,” reads the email before noting "our costs are too high, we're operating in markets where we're not competitive and we're losing money."

Workers in China, India and US will be affected by this latest round of lay-offs. A Motorola Mobility spokesperson told the Journal these layoffs were the second phase of last summer´s dismissal of 1,200 employees.

"These cuts are a continuation of the reductions we announced last summer. It's obviously very hard for the employees concerned, and we are committed to helping them through this difficult transition."

Google first announced their plans to pick up Motorola Mobility in 2011 and finally closed the deal last May. This move was seen as a way for Google to arm themselves for current and future patent battles. Google is currently locked in patent litigation with Microsoft.

Motorola Mobility´s patent portfolio consists of nearly 17,000 patents dating back to the 1980s and the days of StarTAC.

In the months following the purchase, Google´s Motorola has yet to earn many significant wins in their fight with Microsoft. Meanwhile, the Motorola Mobility business remains unprofitable, posting an operating loss of $500 million in the fourth quarter.

Though an early and major player in cellular, Motorola has yet to recreate the same kind of hit as the 2005 Razr, a phone the company has tried to reincarnate in the Droid Razr.

Motorola´s Droid phones were an early Android hit, launching the first Droid on Verizon in 2009.

The company is now facing increasing competition from another Google partner, Samsung. The Galaxy S III has all but become the quintessential Android phone in terms of market share and units shipped. Google continues to offer their own Nexus line of smartphones which deliver the “true” Android experience, but even these phones can´t touch Samsung´s sales numbers.

In a recent address to the Morgan Stanley Technology conference, Google´s CFO Patrick Pichette said the Google influence won´t be felt on any Motorola smartphone until the pipeline runs dry. This could take up to six months.

"So Motorola has this great set of assets but it has a pipeline of products that were fine but not really to the standard that Google would say is 'wow, innovative, transformative'," said Pichette, according to ZDNet.

"So you invest for the long term, but we've inherited 18 months of pipeline that we actually have to drain right now while we´re actually building the next generation of product lines."